A NEW COLLECTIONS TOOL FOR LANDLORDS IS AVAILABLE

The Apartment Association of Southeastern Wisconsin has recently entered into a contract with Rent Recovery Service so that AASEW members can receive a discount on this new collection tool for landlords.

You can access Rent Recovery Services from the AASEW website. After providing Rent Recovery Service with the necessary information about your ex-tenant, RRS will send a letter to the debtor advising them of the debt. If the ex-tenant has not made payment arrangements to pay you back you will be allowed to report the money that the tenant owes you to the 3 credit bureaus.

This is definitely worth looking into -- contact Bill Gray at 212-561-5492 or bill@rentrecoveryservice.com for more information and to sign up.

NEW PUBLISHED CASE ON EMERGENCY ASSISTANCE STAYS

We will soon have a published Wisconsin Court of Appeals decision on the issue of emergency assistance stays in eviction actions that will assist us as landlords in removing the non-paying tenant.

Sec. 799.40(4) of the Wisconsin Statutes states that a court must stay an eviction action brought against a tenant that has applied for emergency assistance. The stay remains in effect until it is determined if the tenant is eligible for the assistance, and if they are, until that assistance is received. For any of you that have been in this situation you are well aware that this stay can work a substantial hardship on the landlord who is now required to allow a tenant to remain in his/her property for free. Even if the tenant is eventually awarded the emergency assistance it typically does not cover the full amount of the past due rent owed and as such the landlord declines the money and asks for his/her writ. The tenant then uses the assistance money for the security deposit on their next apartment.

This stay can delay an eviction for months. Such a situation is frustrating at best and an improper "taking" of a landlord's property at worse. In the case of McQuestion v. Crawford (Appeal No. 2008AP1096) from District I (Milwaukee) of the Wisconsin Court of Appeals, it was held that "implicit in the statute's mandate that a stay is required until the tenant receives the emergency assistance is a requirement that the tenant seek and find suitable permanent housing within a reasonable period of time."

What is a "reasonable" amount of time will still need to be determined on a case by case basis by a judge but at least there will now be some required inquiry into the efforts made by the tenant to locate new housing and consideration made for the amount of time that this takes. Wisconsin landlords now have case law to support our arguments that the length of the stay is no longer reasonable.

PASSING OF WORTHLESS CHECKS WILL NOT BE PROSECTED IN CITY OF MILWAUKEE

Issuing a worthless check is a crime in Wisconsin. Accordingly, when a tenant pays his/her rent or security deposit with a worthless check I typically advise my landlord clients to do two things: (1) serve the tenant with the proper notice terminating tenancy for failure to pay rent so that an eviction action can be commenced against the tenant, and (2) report the crime to the local police so that a potential criminal action could be initiated against the tenant. Unfortunately, this second piece of advice is no longer valid -- at least for clients who own or manage rental property in the City of Milwaukee.

The Milwaukee Police Department have in place a written policy statement containing 20 exceptions to its normal prosecution of "worthless check" complaints, and one of those policy exceptions directly affects landlords and/or their agents: Policy Exception 17 states that "checks issued pursuant to any contractual agreement, including the payment of rent or security deposits for rental property," will not be pursued. The Milwaukee Police Department does not provide an explanation or rationale for this policy exception. And upon reading the entire list of policy exceptions, I am hard pressed to come up with any situation involving the issuance of a worthless check which wouldn't fall under one of the twenty exceptions. Apparently, the Milwaukee Police Department is not interested in pursuing individuals who pass worthless checks in general and, specifically, the MPD will not pursue tenants who pass them to their landlords.

This means that it is more important than ever that City of Milwaukee landlords and/or property managers do thorough and legal background checks on all prospective tenants in order to increase their odds of obtaining trustworthy and responsible tenants. Secondly, landlords may want to consider adding language to their standard rental agreements stating that any and all rental payments and security deposit payments must be made via certified funds (i.e., certified check/cashier's check or money order). Third, City of Milwaukee landlords now have another reason not to allow tenants who have fallen behind with their rent payments to continue to reside in the their properties.

In order to protect yourself and your properties, landlords or their managers should consider commencing an eviction against a tenant as soon as the tenant is late in paying even one month's rent. If landlords continue to allow tenants to get further behind in rent payments and continue to accept promises of future payments from such tenants, landlords will increase the chances that the promised past due rent payments will be made via worthless checks -- and now landlords will receive absolutely no assistance from the Milwaukee Police Department when trying to recover these funds from their tenants.

TENANT PROTECTION ACT PASSED

A new law has recently been passed that will affect rental property owners that may be in the unfortunate position of having their properties foreclosed upon as well as those individuals that may be purchasing a property that has been foreclosed. Sen. Lena Taylor's bill referred to as the "Tenant Protection Act" (SB 78) was incorporated into the budget repair bill that was recently passed.

The new law requires that the property owner notify any prospective tenant in writing that (a) a foreclosure action has been commenced, and (b) if a judgment for foreclosure has already been entered, the date when the redemption period expires. Further any rental agreement that is entered into while a foreclosure action is pending must include a separate written statement, signed by the tenant, stating that the owner has provided the above notice to the new tenant. The rental agreement will be voidable at the option of the tenant if it does not include the written statement.

With regard to current tenants, the new law requires that the plaintiff in the foreclosure action (typically a financial institution) give the tenants several notices advising them as to the status of the foreclosure action. Failure to provide the notices will allow the tenant to be awarded $250 in damages plus reasonable attorney's fees.

Also under the new law, if a tenancy is terminated as a result of a foreclosure judgment the tenant may retain possession of the unit for up to 2 months after the end of the month in which the sale of the property is confirmed (but the tenant must pay rent during this period at the same rate that was applicable prior to the confirmation). Also the tenant may withhold rent in an amount equal to the security deposit during the last month of possession. Furthermore, no eviction judgment for the removal of the tenant whose tenancy was terminated as a result of a foreclosure judgment, may be executed before the end of the second month after the foreclosure sale was confirmed.

Finally, if an eviction action was commenced against a tenant and their removal from the rental property was due to a mortgage foreclosure then no information regarding that eviction can be included on CCAP.

The newly enacted law can be viewed here (it starts on page 108)

TIME TO REVIEW YOUR RENTAL DOCUMENTS

With the new year already upon us, I encourage all property owners and managers to spend some time reviewing their current rental documents so that any needed changes can be made before accepting new applicants. Below are some questions and ideas that may assist you in your review.

Is the rent amount that you are charging your current tenants in line with the what other similar properties are being rented for in the same neighborhood? If your monthly rental price is "under market" then you should consider increasing your rent. Have your costs of doing business increased over the past year? If so, then you have yet another reason to increase your rent amount as long as the rental market in which your rental property is located can accomodate such an increase.

Does your residential lease contain an automatic renewal clause whereby at the end of the lease term it automatically renews for another lease term or even reverts to a month-to-month tenancy? If the answer is yes, then insure that an automatic renewal or reversion is what you actually want. Many landlords are now opting to have their lease agreements cease at the end of the term. By doing so, the owner or manager now has the inclination and reason to review his/her tenant's behavior and payment history over the past year and determine whether or not they want that tenant to remain in their property for the next year. It should also be noted that owners using automatic renewal provisions in their leases must also provide written notice of that renewal to the tenant in order for the provision to be enforceable.

In light of your interactions (both good and bad) with your tenants this past year is there a need to add any additional restrictions to your Rules and Regulations? If you have encountered any problem behaviors from your tenants this past year then consider amending your Rules & Regulations to include a new provision addressing the unwanted behavior.

Has your written screening criteria changed during the preceding year? If so, then you will need to update your screening criteria, specifically noting the changes made, and do this is writing. Be sure and save your old screening criteria and also record the date when you stopped using it. Remember, having written screening criteria and applying it consistently is the #1 best defense to any discrimination/Fair Housing complaints.

Have you incurred any additional costs or fees this past year (other than "normal wear and tear" to your property) that you would like to pass on to your tenants? If so, consider adding these costs to your Nonstandard Rental Provisions. By adding the new charges or fees to your NSRP, reviewing those charge with your tenants, and obtaining your tenantss signatures on the NSRP, you will be able to legally deduct these charges from your tenant's security deposit if needed.

Are you utilizing the Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards form Did you provide a copy of this important document along with a copy of the E.P.A.'s free pamphlet entitled "Protect Your Family From Lead In Your Home" to all of your new tenants this past year? If you are not providing these two documents to all tenants that reside in any of your pre-1978 properties then you are in violation of federal laws and subject to large fines, regardless of whether anyone incurs lead poisoning or not.

LLC'S MUST FILE ANNUAL REPORT WITH DFI

Effective January 1, 2004, all domestic Limited Liability Companies are required to file an Annual Report with the Department of Financial Institutions (DFI).

The report is due during the anniversary quarter of the LLC's effective date of organization on record with DFI. The report will be sent to the registered agent of each LLC to the registered office of record. The Annual Report is fairly simple to complete and there is only one page of information that must be filled out. The requested information includes the name and contact information of the Registered Agent, the office address, the name and contact information of any managers of the LLC, if applicable, and a brief description of the nature of the company's business.

You may submit the report online through the DFI website or via the mail. If you file online you will receive a free copy of the filed report via email. Also, if you file online, your next year's report will be pre-filled with the information that you submitted the previous year.

"Here's the rub" - there is a filing fee of $25 for each report. Which means you will have to pay the state $25 per year for each of your domestic LLC's. Visa and MasterCard credit cards will be accepted but debit cards will not. If paying by check your check should be made payable to "Department of Financial Institutions" and should be mailed to:

Department of Financial Institutions

P.O. Box 93739

Milwaukee, WI 53293-0739

It should be noted that if any domestic LLC fails to file this mandatory report in a timely manner that the DFI may administratively dissolve the LLC.

IMPORTANT WEBSITES TO ASSIST WITH SCREENING TENANTS

As I have mentioned before, the screening process is in my opinion the single most important aspect of the rental process. Sufficient time should be spent by the landlord to attempt to ensure that the chosen tenant will be able to live up to and abide by the rental agreement.

Below are some websites that I find very helpful during the screening of my tenants.

CCAP - Wisconsin's Consolidated Court Automation Program - This is a free tool that allows you to access to all state court filings within Wisconsin with the exception of paternity lawsuits and juvenile delinquency petitions. It includes criminal lawsuits, civil lawsuits including eviction actions, divorces, harassment injunctions, replevins (repossession of vehicles), foreclosures, money judgments etc.

Milwaukee Municipal Court Case Information System (MMCCIS) - This is a free website that allows you to enter a persons name and determine if they have received any municipal tickets in the city of Milwaukee for such things as possessions of drugs, possession of drug paraphenelia, battery, traffic violations etc. It should be noted that receiving a municipal ticket is not the same as being charged with a crime. Municipal tickets are just civil forfeitures (fines).

Family Watchdog - This is a free website that allows you to search for convicted sex offenders thoughout the United States by name or location.

Wisconsin's Sex Offender Registry - Run by Wisconsin's Department of Corrections this free website allows you to search by name or location to determine whether or not a person has been convicted as a sex offender within the state.

PACER - Bankruptcy filings in Eastern District of Wisconsin - This website allows you to search (for a nominal cost) to determine if a person has ever filed a bankruptcy in the Eastern District (includes Milwaukee) of Wisconsin.

Wisconsin Department of Financial Institutions - This free website proves helpful for commercial landlords who want to check the status of a prospective status of a tenant that is a business entity (LLC, SC, INC, LP etc). It allows you to search its database and willlet you know if such an entity exists and who its registered agent is and his/her address, and whether or not the business entity is delinquent in its filing with the state.

Landlord Services, LLC - This company based in Green Bay is endorsed by the Apartment Association of Wisconsin (AASEW) and will run credit checks on your rental applicants as well as criminal background checks etc.

City of Milwaukee Property Recording Data and Department of Neighborhood Services Property Recording - Both of this sites will allow you to enter an address and find out who owns the property. This is an especially useful tool when screening applicants and you want to verify that their prior landlord is really their prior landlord - and not a family member or friend who will tell you what a great tenant they are.

SSN Validator: This site will allow you to enter a social security number and it will provide you basic information such as if the SSN was issued, approximate date that it was issued, state where it was issued, and if the person that it was issued to is deceased. This information will allow you to better determine if the SSN that an applicant lists on your rental application is legitimate. Use of this site is free.

SCREENING PROSPECTIVE TENANTS

UPDATE - APRIL 15, 2016 ---- Please review my April 15, 2016 blog post on HUD's new guidance regarding the consideration of a rental applicant's criminal history in the screening process as it may impact or alter the information in this blog post.

Screening prospective tenants is the single most important aspect of the rental process regardless of whether you are renting residential or commercial property. If done properly, screening can save a landlord a lot of money, a lot of time, and a lot of headaches. Setting up a proper and legal screening process, which includes the drafting of a Rental Application and written Screening Criteria, can help reduce the need to evict a tenant, defend yourself against a claim that you violated the Wisconsin Administrative Code's Residential Rental Practices (ATCP 134), defend yourself against a claim for discrimination under the Fair Housing laws, and preserve your property from physical damage.

There are several steps to a good screening process. First, you must verify that the applicant is who s/he says there are. The best way to do this is to require each adult applicant to completely fill out a rental application. You should also ask each adult to provide you with a valid photo identification. Request a copy of the applicant's prior utility bill or cable bill as well. You want to ensure that the address on the bills is the same as the address listed on the photo identification and the rental application. You should also obtain the applicant's date of birth and social security number. Require that they provide you with any prior names that they have used in the past few years such as maiden names, if they are recently married, or married names if they are recently divorced. If you are renting to a business entity verify its existence with the Secretary of State's Department of Financial Institutions. Obtaining all of this information early will greatly assist you later in the screening process.

Second, have written screening criteria in place before you start accepting rental applications and ensure that your criteria is applied consistently. Your criteria should set forth the minimum requirements that are necessary to rent your property as well as what will cause an applicant to be denied. You can provide the written screening criteria to each prospective applicant along with the application, or at the very least, you should memorialize the criteria in writing, date it, and keep it for at least 3 years. It is important to remember that if you make an exception to your screening criteria for one applicant that you have now lost the protection of having the criteria in the first place ---- so avoid making any exceptions.

Your screening criteria should not be subjective. Rejecting an applicant because they give you a "bad feeling" or because you did not "connect" with them will only run you afoul of Fair Housing laws. You criteria needs to be objective. Federal laws contain seven (7) different protected classes and the state of Wisconsin has twelve (12) protected classes. You may not deny an applicant because they are a member of any of the following protected classes in Wisconsin: race, color, national origin, sex, religion, familial status, handicap, marital status, sexual orientation, lawful source of income, ancestry and age (18 years old and over). Some local municipalities (the city of Madison comes to mind) have added additional protected classes. So it is important to check all local ordinances where your rental properties are located prior to drafting your screening criteria.

A common misconception is that you cannot reject an applicant who is a smoker, who has a money judgment against them, or who has previously been evicted. Smokers, debtors, and people with past evictions are not members of a protected class and therefore legal screening criteria can exclude them without violating Wisconsin or federal discrimination laws. Other examples of proper screening criteria include the following: (1) Applicant must have monthly income of 3 times the monthly rental amount; (2) Applicant must have no unsatisfied money judgments against them; (3) Applicant must have a credit score of at least 600; (4) Applicant must complete all questions on the rental application; failure to answer all questions or provide an acceptable reason for not answering all questions are grounds for denial of your application.

Third, you should run every applicant's name through Wisconsin's Consolidated Court Automation Program (CCAP). This website lists all criminal and civil legal actions filed throughout the state. By becoming adept with CCAP's search capabilities you will be able to discover if a prior landlord has started an evictions action against your applicant, if your applicant has ever been charged with a crime, or if they have been sued for owing money to someone and whether or not they have satisfied that judgment. Best of all CCAP is free and open to the public.

Fourth, you should obtain a credit check for applicant that is still under consideration after checking CCAP. A landlord may require the applicant to pay the actual cost of the credit check up to $20 if they so wish. In order to charge this fee however you must obtain the credit report from a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis (TransUnion, Experian or Equifax) and you must notify the applicant of the cost before ordering the report and provide them with a copy after it is received.

These four steps for screening and qualifying a prospective applicant for your rental property are the bare minimum that should be done to ensure that you are protecting your investment.

UPDATE - APRIL 15, 2016 ---- Please review my April 15, 2016 blog post on HUD's new guidance regarding the consideration of a rental applicant's criminal history in the screening process as it may impact or alter the information in this blog post.

ATCP 134 - RESIDENTIAL RENTAL PRACTICES

If you are a landlord are you familiar with ATCP 134? If not, you definitely need to be. ATCP 134 is a chapter of the Wisconsin Administrative Code that applies to residential rental practices. While these rules were updated in 1998 many well-intentioned landlords are still unfamiliar with their provisions and the rather extreme consequences that may result if you fail to abide by them.

The most overlooked - and the most litigated - rule is ATCP 134.06 (2) which pertains to the return of a tenant's security deposit. This rule states that a landlord shall return a tenant's security deposit to that tenant within 21 days after the tenant surrenders the premises to the landlord. This applies whenever the tenant leaves your unit whether that be at the end of the rental period or as the result of being evicted.

If the tenant has damaged the premises or owes back rent such amounts can be deducted from the tenant's security deposit however the 21-day letter must still be sent to the tenant showing the itemized deductions that were taken form their security deposit. The security deposit and/or 21-day letter must be sent to the tenant's forwarding address or if that was not provided then to the tenants last known address.

The consequences to the landlord who fails to follow the above rules are severe. Together, ATCP 134 and the Wisconsin Statutes, allow a tenant to sue a landlord who fails to return the security deposit or mail the 21-day letter to the tenant within the 21 day time period, for double the amount of the security deposit, together with the costs of the lawsuit and the tenant's reasonable attorney's fees. Yes, that is correct, that same tenant that you were forced to evict for failing to pay their rent or for disturbing their neighbors by playing their music too loud, can now come back and sue his/her landlord. Adding insult to injury, besides receiving a damages judgment against you, the landlord, you will also be stuck having to pay the fees of the lawyer who was hired by your ex-tenant to sue you.

If you are a landlord and are unaware of the above residential practice rule or are unfamiliar with ATCP 134 in general, I urge you to become knowledgable before you become mired in such a situation.

Welcome to Tristan's Landlord Tenant Law Blog

Welcome. My name is Tristan Pettit and I am an attorney with the law firm of Petrie & Stocking S.C. One of my specialties is the area of landlord tenant law. I am also the current President of the Apartment Association of Southeastern Wisconsin (AASEW). I have been practicing in the area of landlord tenant law for over 13 years. I appear in eviction court several times per month in various counties. I also give seminars on all aspects of landlord tenant law to landlords, property managers, and others affiliated with the rental housing industry including other lawyers. Needless to say I enjoy the exciting (and often frustrating) area of landlord tenant law.

One day I was searching the internet to see if I could find a landlord tenant law website or blog in Wisconsin to connect with others in the industry. I was surprised to find only one blog in Wisconsin that even touched on the topic (Dr. Rent Chronicles from the Wausau area). I expanded my search a bit hoping to locate some L-T law blogs outside of Wisconsin - I found less than a handful and none of them seemed to discuss the nuts and bolts of landlord tenant law. While there are tons of blogs and websites devoted to real estate law, it is my opinion that landlord tenant law is a very specific sub-category of general real estate law and one that deserves it own voice. This lack of a forum for landlords and others related to the rental housing industry gave birth to Tristan's Landlord Tenant Law Blog.

It is amazing to learn how many landlords there are just in the Milwaukee area alone. You have the reluctant landlords - those who bought a new home and due to the poor economy were unable to sell their existing home and therefore were forced to rent it out. You have the rehabbers who bought a property that needed some work who hoped to fix it up and then sell it off only to find that in this poor real estate economy that there was a glut of properties and not enough buyers. Then you have the intentional landlords - those crazy individuals who enjoy chasing down rent money at all hours of the night and taking calls on weekends and holidays for clogged toilets and broken water heaters. It is my hope that this blog will offer something to both the intentional landlords and the reluctant landlords as well as others involved in the rental housing industry.

The area of landlord tenant law can be confusing at best and down right contradictory at worst. There are statutes, administrative code provisions, and case law out there all of which must be read and digested and applied to the specific facts of your situation. Add to that the fact that every county in Wisconsin has their own local rules for their respective court systems which often differ from the other counties. Further complicating matters is that even within the same county you have judges and court commissioners that interpret the law differently often resulting in very different outcomes.

It is my opinion that Wisconsin is a very tenant-friendly state. One need only look to the Wisconsin Administrative Code chapter entitled "Residential Rental Practices" (ATCP 134) to see that. ATCP 134 contains twenty-one rules that landlords must follow. Failure to abide by these rules opens the landlord up to being sued for double damages by their tenant and being required to pay the tenant's own attorney fees. Needless to say there are no such rules setting forth similar requirements for tenants.

I plan to discuss all aspects of landlord tenant law in this blog including: screening tenants, rental documents, Notices for Breach and/or Terminating Tenancy, ATCP 134, evictions, collections of money owed, security deposits, Fair Housing laws (discrimination), rent abatement, abandoned property, late fees and much more.

Because of Wisconsin being such a tenant-friendly state, landlords, owners, and managers need to have a firm grasp of landlord tenant law. It is my sincere hope that this blog will serve as a forum for those involved in the rental industry to learn, discuss, argue (politely), and interact with each other. In order to accomplish this I will need your support, readership, comments, and involvement. I hope that TRISTAN'S Landlord Tenant Law Blog will become a place where we can exchange ideas, answer questions, blow off some steam, make connections, and generally have fun.

Thanks

T